Beyond Great Resignation: Winning the Talent war and Corporate Performance

The COVID-19 disruptions caught many CEOs flat-footed, as did the employees who depended on them for strategic guidance and leadership. A few months into the pandemic, stay-at-home orders were imposed, and social distancing became the new normal; lives and livelihoods were at stake.

The Making of the Great Resignation

Companies responded by urging remote work or hybrid work arrangements. The general assumption was that employees – whether poor or rich, living in spacious homes or not, raising kids, could switch to the new working model forced upon modern workplaces by COVID-19’s lethal threats. However, our survey suggests otherwise, given that 71% of employees found their working conditions adequate, 29% said otherwise. On top of this, business leaders failed to understand the changing composition of the modern workforce, which is increasingly dominated by millennials – those born between who require a different type of attention regarding employee experience; otherwise, they will jump ship.

In short, our research found that a combination of disruptive convergence compounded by COVID-19-related stress, poor employee digital experience, and old-age HR and cultural issues resulted in people quitting their jobs in droves. An assistant professor rightly predicted the problem at Texas’s A&M University weeks before the disruption began.

While the Great Resignation needs CEOs’ and business leaders’ attention regarding what is wrong with their cultures and talent management and retention strategies, they should not lose sight of other emerging threats on the horizon regarding the future of the talent war and how to win the war in general while improving corporate performance.

The Future Talent Landscape Worldwide

The talent war will intensify in the coming years, given that the business world needs to compete on just 300 million graduates by 2030 – equivalent to fewer than 7,000 graduates per listed firm – without mentioning private companies worldwide.

Just five countries – China, India, the United States, Indonesia, and Brazil, will account for 68% of the talent supply, while the rest of the world produces the remaining 32%. As such, we believe small and large companies need to craft a winning strategy to gain a competitive edge before it’s too late.

On top of that, as of 2019, we had just 22,500 PhD-equivalent AI experts worldwide. Moreover, on LinkedIn, 37,000 other self-proclaimed AI specialists exist. By any account, the scarcity of artificial intelligence talent is profound. For this reason, many large firms have taken the war from the private sector to the world of academia by persuading leading researchers at institutions such as Carnegie Mellon to join their research labs worldwide. The scarcity of AI experts has been a boon for people with such expertise, given that the salary of some top AI experts topped $950,000 even at non-profits.

Our research suggests that some reasons behind talent scarcity can be traced back to the ever-rising costs of higher education. These costs resulted in eye-popping student debt, equivalent to Australia’s GDP of $1.32 trillion in the second quarter of 2015. In other words, between the first quarter of 2006 and the second quarter of 2015, United States student loans grew by $163 million every minute.
Moreover, the other hidden, non-obvious issue worldwide is the downward trend in the prime working-age population growth rate. Consider the US, for instance, the land of the world’s top academic institutions. The growth rate has plunged nearly 90% between the 1980s and now.

AI Experts’ Salaries and Competition Against Academic Institutions

As the scarcity of AI experts became pronounced across industries and countries, many leading firms took the war for talent to another level by competing against academic institutions. They have been persuading academic AI experts to join their labs in the US and worldwide. For this reason, among others, the salary of some top AI experts topped $950, 000 in recent years. Thus, it will be wise for firms to craft employee retention and experience strategies to win, which may be cheaper than external digital talent hiring. However, many companies still believe committing corporate resources to employees’ development, including upskilling and reskilling, is a mortal sin. We believe this position is misguided. And here is why.

What Makes Costco – The Retail Giant – so Successful

According to Costco’s cofounder Jim Sinegal, the firm has constantly spent 65% of its operating expenses on its employees. As such, if investing in employees is a mortal sin, Costco should have failed. But that’s not the case. Between 2017 and 21, the firm’s sales grew 52% to $195 billion while its operating profits soared 65% to $6.6 billion.

Similarly, in recent years, its employee turnover has been just below 10% compared to its industry average, which is eight times as much as Costco’s. In other words, the firm became the envy of its industry.

The Trend in HR Technologies and the Rise of Gamification

Digitalization has made job applications easier over the years but has created a headache for HR departments worldwide. Some firms with golden cachet, such as Google and other leading Tech firms, saw their unsolicited applications grow exponentially. Google, for instance, receives over 2 million unsolicited CVs annually. For this reason, many have adopted applicant tracking systems (ATS). However, ATS has its flaws. For one thing, ATS tracks CVs by keywords and relevancy. It is used by 89% of Fortune 500 firms.

However, the ATS technology has a “culture fit” problem. For instance, missing keywords hurt the candidates’ interview chances by over 73%. The trouble with the ATS is that it struggles to capture essential abilities, such as creativity and problem-solving. As such, leading firms, including LinkedIn, Tesla, and white-shoe consulting firms, have turned to gamification to compensate for ATS tech weaknesses.

The Imperatives of HR Leadership for Performance Improvement

As we comb through flaws and trends mentioned elsewhere in this article, one thing becomes crystal clear. To win in this age of generic AI, CEOs and HR leaders need to quickly make sense of the fast-moving changes across the global economy and craft their strategies according to these trends while adapting their cultures to new imperatives of the moment. That is, they need to learn to lead through unexpected disruptions by understanding the limitations of the tools of the trade they are currently deploying. In other words, beyond the competition, many firms have been victims of the cultures, HR strategies, and tools at their disposal without realizing it.